Boeing 737 Re-engining Decision Hinges On Replacement Timing

Boeing's decision to retrofit new engines on the 737 could depend as much on the technology available for an all-new replacement airplane by 2020 as any move by Airbus to re-engine the A320. (Copyright Boeing)

Boeing's decision to re-engine the existing 737 will depend not only on the actions of arch-rival Airbus, but whether or not the Chicago-based airframe maker concludes that it could bring to market a good enough replacement airplane by 2020, Boeing CEO Jim McNerney told analysts and investors at last week’s Sanford C. Bernstein Strategic Decisions Conference in New York.

“The number-one thing I want to know is during what time frame we can get an all-new airplane done, that our customers will pay for,” said McNerney. “If that answer is 2025, then the case for re-engining strengthens. If the answer is 2020, no matter what Airbus does, I think customers will wait for us.”

Re-engining, if Boeing decides to follow that route, would likely happen around 2016, added McNerney. “We’re also studying how fast can we flow the technology from the 78[7] into a new narrowbody, what will an engine look like out there, and then stare at the two and make a judgment. I’d rather not put the backlog at risk twice if I don’t have to.”

Meanwhile, McNerney essentially discounted the Bombardier C Series as a serious threat, referring to it as one of a class of “regional jets that are getting a little bigger.” Seating up to 145 passengers, the CS300 would occupy a capacity category now filled by the 737-700 and A319. “That's not necessarily a market segment we want to be in,” he said, referring to the sector that the C Series would occupy.

“The one thing I do know about new entrants is that the Chinese will be there,” said McNerney. “And when I say ‘there’ I mean a competitive narrowbody airplane in the 150-, 160-, 170-[seat range]–not a regional jet. The argument is around will it be in 10 years [or] 20 years.”